Fear is a tricky emotion. It controls us in unusual ways. My favorite response to fear is lying awake at night. The older I get the more frequently this happens. I play out my fears while everyone else in my house sleeps soundly. A recent article about The Big One hitting Seattle provided many sleepless nights. Its always something right? What if my retirement nest egg doesnt last long enough? Will my wife be able to take care of me if I get really sick? What if I hit a bicyclist or someone crossing the street with my car?
My fears can be categorized into things I can control and things that are out of my control. I am unable to prevent an earthquake, but I can be prepared for it. I may not see a pedestrian in front of my car, but I can be protected if that day ever comes.
There is an insurance product called a personal liability umbrella policy. Imagine that the actual umbrella you keep in your car is now big enough to shelter not just you, but your cars, home, boat, etc. The purpose of owning it is to protect all of these assets. If you are liable for critically injuring someone and you dont have enough liability on your auto insurance policy, that person may file a lawsuit against you, leaving your assets at risk. Liquid assets, property, wages and sometimes even retirement accounts can be turned over if you dont have enough liability coverage. As many clients I talk to march closer to retirement, their 401K’s and ROTH IRA’s have ripened with decades of investment and time in the market. It’s important to remember that at 59 1/2 retirement accounts become liquid. You have some asset protection while leaving money in a 401K, but some people move money into other, unprotected, investments in their retirement years.
Adding a personal liability umbrella policy to your insurance coverage is a relatively low cost, smart solution. Coverage typically starts at one million in liability protection and goes up from there. They are a great, cost effective way to protect what you have worked so hard to build. Most policies have endorsements that can be added if you own a rental property or boat. The policy may even cover your attorney fees if you find yourself going to court.
When I began my career in the insurance industry, this is the first policy I sold myself. It was a relief to know that if I was dealt the unfortunate card of being hit with a liability lawsuit, my life wouldnt be turned upside down. So check in with your insurance agent or financial planner to make sure your liability coverage is enough to protect what you’ve built. Having this security will quiet your mind and allow you to catch some more z’s.